S.Erajan, CHENNAI V. ADIT, CHENNAI

ITA 383/CHNY/2015

• Counselvise Citation: 38321714 RSA 2015
• Duration Of Justice: 6 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-09-2015
• Appeal Filed By: Assessee
• Bench Allotted: D
• Assessment Year: 2009-2010
• Appeal Filed On: 19-02-2015
• Court: TRIBUNAL
• Keywords: Gift

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH : CHENNAI . . . , . !' , # $ % [ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ] ./ I.T.A.NO.383/MDS/2015 / ASSESSMENT YEAR : 2009-10 SHRI S. ERAJAN AGENT FOR NON RESIDENT DR. S. KUMAR, BLOCK Y-20, 5 TH AVENUE, ANNA NAGAR CHENNAI 600 040 VS. THE ASSTT. DIRECTOR OF INCOME- TAX INTERNATIONAL TAXATION I CHENNAI [PAN AACPK 5793 L ] ( &' / APPELLANT) ( ()&' /RESPONDENT) / APPELLANT BY : SHRI K. MEENAKSHISUNDARAM, ITP /RESPONDENT BY : S HRI A.B. KOLI, JCIT / DATE OF HEARING : 11 - 08 - 2015 ! / DATE OF PRONOUNCEMENT : 11 - 0 9 - 2015 / O R D E R PER N.R.S.GANESAN, JUDICIAL MEMBER THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-16, CHENN AI, DATED 27.1.2015 AND PERTAINS TO ASSESSMENT YEAR 2009-10. ITA NO. 383/15 :- 2 -: 2. SHRI MEENAKSHISUNDARAM, LD. REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT ASSESSEES FATHER LATE T.K .SOMASUNDHARAM PILLAI GIFTED A SUM OF ` 1 CRORE TO HIS SON, THE PRESENT ASSESSEE, AND HIS DAUGHTER-IN-LAW. ACCORDING TO THE LD. REPRESEN TATIVE, A SUM OF ` 50 LAKHS WAS GIVEN TO THE ASSESSEE AND THE BALANCE ` 50 LAKHS WAS GIVEN TO HIS DAUGHTER-IN-LAW. THE LD. REPRESENTATI VE FURTHER SUBMITTED THAT PROBABLY THE ASSESSEES FATHER LATE T.K.SOMAS UNDHARAM PILLAI MIGHT HAVE FEARED THAT IF THE ENTIRE GIFT OF ` 50 LAKHS WAS GIVEN TO HIS DAUGHTER-IN-LAW, SHE MAY DESERT HIS SON, THEREFORE, INSTEAD OF GIVING ` 50 LAKHS TO HIS DAUGHTER-IN-LAW, HE MADE CONDITIONA L GIFT STATING THAT HIS SON, THE PRESENT ASSESSEE, SHOULD KEEP THE CAP ITAL AMOUNT INTACT AND USE THE SAME FOR EARNING INTEREST INCOME AND 50 % OF THE INTEREST INCOME SHOULD BE PAID TO HIS WIFE. IN FACT, ACCORD ING TO THE LD. REPRESENTATIVE, THE ASSESSEE INVESTED THE ENTIRE A MOUNT OF ` 1 CRORE IN BANK DEPOSIT WITH STATE BANK OF INDIA AND RECEI VED INTEREST OF ` 9,36,152/-. HOWEVER, WHILE FILING THE RETURN OF IN COME, THE ASSESSEE DISCLOSED 50% OF THE INTEREST INCOME ON THE GROUND THAT THE REMAINING 50% WAS GIVEN TO HIS WIFE BY VIRTUE OF THE CONDITIO NAL GIFT MADE BY HIS FATHER. ACCORDING TO THE LD. REPRESENTATIVE, 50% O F THE INTEREST INCOME HAS TO BE ALLOWED AS DEDUCTION BY VIRTUE OF OVERRIDING TITLE. ACCORDING TO THE LD. REPRESENTATIVE, THE GIFT MADE BY THE ASSESSEES FATHER IS A CONDITIONAL ONE, THEREFORE, 50% OF THE INTEREST IS A CHARGE ITA NO. 383/15 :- 3 -: IN RESPECT OF THE ASSESSEES WIFE. WHEN THE CHARG E WAS CREATED BY THE DONOR HIMSELF, THE ACCRUED INTEREST ON THE FD H AS TO GO TO THE ASSESSEES WIFE BY OVERRIDING TITLE. THE LD. REPRE SENTATIVE HAS FILED A COPY OF THE GIFT DEED EXECUTED BY THE ASSESSEES F ATHER BEFORE THIS TRIBUNAL. ON A QUERY FROM THE BENCH WHETHER THE F ACT OF RECEIVING GIFT BY THE ASSESSEE AND HIS WIFE WAS DISCLOSED I N THE RETURN OF INCOME, THE LD. REPRESENTATIVE CLARIFIED THAT IT MI GHT HAVE BEEN DISCLOSED TO THE DEPARTMENT BY THE ASSESSEE. THE LD. REPRESENTATIVE FURTHER CLARIFIED THAT THE ASSESSEES WIFE HAS NOT FILED ANY RETURN OF INCOME. THE LD. REPRESENTATIVE HAS ALSO CLARIFIED T HAT EVEN THOUGH THE ASSESSEE IS CLAIMING DEDUCTION OF 50% OF THE INTERE ST INCOME EARNED ON THE FD, NO AMOUNT WAS PAID TO HIS WIFE FROM THE INTEREST INCOME. 3. ON THE CONTRARY, SHRI A.B.KOLI, LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE AFFIDAVIT DISCLOS ES THAT THE INTEREST ACCRUED ON THE FD IS INCOME OF THE ASSESSEE, THEN IT HAS TO BE APPLIED FOR MAINTAINING HIS WIFE. ACCORDING TO THE LD. DR, THE ASSESSEE ALONE IS ENTITLED TO THE INTEREST ON THE DEPOSIT. THE L D. DR CLARIFIED THAT THERE IS NO OVERRIDING TITLE IN RESPECT OF THE SO C ALLED RECEIPT OF INTEREST INCOME ON FD. ACCORDING TO THE LD. DR, IF AT ALL ANY INTEREST WAS PAID BY THE ASSESSEE TO HIS WIFE, IT WAS ONLY AN APPLIC ATION OF INCOME. THE ITA NO. 383/15 :- 4 -: LD. DR PLACED HIS RELIANCE ON THE JUDGMENT OF BOMB AY HIGH COURT IN CIT VS V.G.BHUTA, [1993] 203 ITR 249. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. FR OM THE ORDER OF THE LOWER AUTHORITY, IT APPEARS THAT THE SO CALLED GIFT WAS RECEIVED BY THE ASSESSEE IN THE YEAR 2006. NO DOCUMENTARY EVIDENC E IS AVAILABLE ON RECORD. WHEN THE GIFT WAS RECEIVED BY THE ASSESSE E, DEFINITELY THE RECEIPT OF THE GIFT SHOULD HAVE BEEN DISCLOSED IN T HE RETURN OF INCOME AND THE ASSESSEE MIGHT HAVE CLAIMED EXEMPTION FROM PAYMENT OF TAXATION. SIMILARLY, THE ASSESSEES WIFE SMT.SUMA THY IS ALSO EXPECTED TO DISCLOSE THE SAME TO THE DEPARTMENT IN THE REGUL AR COURSE OF FILING OF RETURN AND CLAIMED EXEMPTION. THOUGH THE ASSES SEE CLAIMS NOW THAT THE RECEIPT OF THE GIFT WAS DISCLOSED IN THE R ETURN OF INCOME, IT IS NOT KNOWN WHETHER THE ASSESSEE HAS DISCLOSED THE E NTIRE RECEIPT OF ` 1 CRORE IN HIS HANDS OR ONLY ` 50 LAKHS AS NOW CLAIMED BEFORE THIS TRIBUNAL. IF THE ASSESSEE HAS DISCLOSED THE RECEI PT OF ` 50 LAKHS ONLY AS GIFT FROM HIS FATHER IN THE RETURN FILED IN THE REGULAR COURSE IN THE YEAR 2006 AND THE ASSESSEES WIFE DISCLOSED THE BA LANCE OF ` 50 LAKHS IN HER RETURN OF INCOME, THEN THERE MAY BE JUSTIFIC ATION FOR CLAIMING THAT THE INTEREST IN RESPECT OF OTHER ` 50 LAKHS MAY ACCRUE TO THE ASSESSEES WIFE. BUT, IF THE ENTIRE ` 1 CRORE WAS DISCLOSED IN THE HANDS ITA NO. 383/15 :- 5 -: OF THE ASSESSEE AS GIFT OR THE ASSESSEE HAS NOT D ISCLOSED THE RECEIPT OF GIFT AT ALL, THEN THE ASSESSEES WIFE MAY NOT B E ENTITLED FOR ANY OF THE GIFT AMOUNT. IN OTHER WORDS, ONCE THE ENTIRE G IFT OF ` 1 CRORE WAS DISCLOSED AS RECEIPT IN THE HANDS OF THE PRESENT A SSESSEE, THEN THERE IS NO QUESTION OF ANY DIVERSION OF TITLE ON THE INT EREST ACCRUED ON THE ABOVE SAID AMOUNT. NO MATERIAL IS AVAILABLE ON TH E FILE OF THIS TRIBUNAL WITH REGARD TO DISCLOSURE OF RECEIPT OF GI FT TO THE DEPARTMENT IN THE REGULAR COURSE OF FILING OF RETURN IN THE YE AR 2006 BY THE ASSESSEE OR HIS WIFE. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE MATTER NEEDS TO BE RECONSIDERED BY THE ASSESSING OFFICER AFTER EXAMINING THE RETURN OF INCOME SAID T O BE FILED BY THE ASSESSEE AND HIS WIFE IN THE YEAR 2006 DISCLOSING THE RECEIPT OF GIFT. ACCORDINGLY, THE ORDERS OF THE LOWER AUTHORITIES AR E SET ASIDE AND THE ENTIRE ISSUE IS REMITTED BACK TO THE FILE OF THE A SSESSING OFFICER. THE ASSESSING OFFICER SHALL RE-CONSIDER THE ISSUE AFRES H AND THEREAFTER DECIDE THE SAME IN ACCORDANCE WITH LAW AFTER GIVING A REASONABLE OPPORTUNITY TO THE ASSESSEE WITHOUT BEING INFLUENC ED BY ANY OF THE OBSERVATION MADE BY THIS TRIBUNAL. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLO WED FOR STATISTICAL PURPOSES. ITA NO. 383/15 :- 6 -: ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH SEPTEMBER, 2015, AT CHENNAI. SD/- SD/- ( . !' ) (A. MOHAN ALANKAMONY) # / ACCOUNTANT MEMBER ( . . . ' ) (N.R.S. GANESAN) / JUDICIAL MEMBER #$ / CHENNAI %& / DATED: 11 TH SEPTEMBER, 2015 RD &' ()*) / COPY TO: 1 . / APPELLANT 3. +,' / CIT(A) 5. )-. / / DR 2. / RESPONDENT 4. + / CIT 6. .01 / GF